Mary Barra Is Running GM With A Tight Fist And An Urgent Mission

It's been a little over three years since Mary Barra became chief executive at General Motors -- the first woman in that role at any automaker -- and as one Wall Street analyst posited during GM's first-quarter earnings call Friday, she's accomplished more in three years than most CEOs do in 30 years.

Noting that her name comes up often as someone whose expertise could help the Trump administration, Morgan Stanley's Adam Jonas was probing to see whether she had any interest in a different career.

Barra's answer was unequivocal: "I am 150% committed to General Motors. This is an incredibly exciting time because not only do I believe we are putting the best vehicles on the road that we have in my (37-year) career here, but when I look at the opportunities that we have with autonomous (vehicles), with electrification, with connectivity, I'm very passionate about it... So that's where my focus is and will be going forward."

Stakeholders should be happy. As a leader, Barra demonstrates a mix of discipline and vision, adroitly balancing GM's immediate imperatives -- producing vehicles people want at a profitable price -- and its longer-term challenges -- ensuring GM's future in the face of unprecedented industry upheaval. She has made decisions other GM leaders never dared, like pulling out of Europe to focus on higher-margin operations in North America and China, while investing heavily in new mobility services like shared, autonomous electric vehicles. She pushed GM to deliver the Chevrolet Bolt EV, the industry's first affordable, long-range electric car, in record time, beating Tesla and the rest of the competition by a full year.

GM's financial performance is one proof point of her effectiveness: three years of record earnings, driven by a combination of cost cuts and higher prices on strong-selling SUVs and crossovers.

GM shares don't show it -- they're stuck at 2010's post-bankruptcy IPO level -- but General Motors is a different company under Barra. Gone are the empty promises and arrogant bluster. With Barra at the helm, there's a quiet confidence that if GM just sticks to its plan, good will eventually come. It's a classic case of under-promising and over-delivering, as in the first quarter, when GM soundly beat Wall Street's expectations with a 33% jump in net income.

It's not all Barra's doing. Members of her inner circle like President Dan Ammann, Chief Financial Officer Chuck Stevens and Global Product Development Chief Mark Reuss have been instrumental in GM's success. Ammann, former head of investment banking at Morgan Stanley, runs the tough analysis of GM's global operations to decide where it should allocate capital to maximize returns and minimize risk. The straight-talking Stevens doesn't sugar coat where GM still needs to improve, but his intense focus on cost reduction is a big reason GM is still meeting its financial targets, while funneling $7 billion back to shareholders through share buybacks and dividends. Reuss, meanwhile, is plotting the future with new cost-saving vehicle architectures, a flood of new electrified cars (especially for China), and self-driving car technology like GM's new Super Cruise feature coming later this year in the Cadillac CT6.

Wall Street remains cautious, though, with two big worries: Will a weaker outlook for new car sales in 2017 trigger a price war that could destroy profits? And, with rating agencies warning of worsening credit and a flood of nearly-new leased cars soon hitting the market, is there a car loan bubble about to pop?

Barra acknowledges the environment is getting tougher, given falling used-car pricing, softer-than-expected sales in South America, more incentives in the U.S. and China, and higher commodity costs. But her team is taking steps to offset those pressures, she says, which is why Stevens is constantly sharpening his pencil. During the analyst call, Stevens said the company still had substantial opportunities to lower costs in the event of a downturn, and also hinted that GM isn't done pulling out of low-margin overseas markets. Barra reiterated that GM is confident it will meet its 2017 earnings target of $6 to $6.50 per share, with EBIT-adjusted margins greater than or equal to 2016.

GM is also likely to be the beneficiary of great timing. The market has shifted sharply toward crossovers and SUVs, and GM's showrooms and pipeline are full of new and refreshed products that buyers are looking for. In 2016, GM launched the Cadillac XT5, the GMC Acadia, the Buick Envision and a refreshed Buick Encore. This year, it's adding redesigned versions of the Chevrolet Equinox and Traverse, the GMC Terrain, and the Buick Enclave.

With rival Ford Motor letting its Lincoln Navigator languish for 15 years without a major update, GM has also captured 80 percent of the full-size SUV market with its Chevrolet Tahoe and GMC Yukon. These truck-based behemoths kick off an estimated $10,000 in profit per vehicle, padding GM's coffers. But Lincoln is finally launching an impressive new Navigator later this year that will likely claw back some sales from GM.

Admittedly, GM's road will be bumpier in the second half. It's planning 13 weeks of factory downtime later in the year to prepare for the launch of those new crossovers as well as new Chevrolet and GMC pickup trucks coming in 2018. Managing that transition will be critical, which is why GM built up extra inventory during the first quarter. It still has too many passenger cars on hand, though, given the market shift toward crossovers and SUVs, so it will likely have to discount those to move them off dealer lots.

It's all a tricky balancing act, and so far, Barra has shown she's up to the task. Reflecting on the first quarter results, she said: "This demonstrates our results that we're going to continue to strengthen the core business, generate the best possible return for our owners and then continue to execute with a huge sense of urgency on the transformative technologies that are really going to allow us to have a leadership position and make people's lives safer, simpler and better as we move forward. We are a very disciplined company as we approach this. I think you've seen action from us. You'll continue to see actions."

It's still early, but my prediction is that Mary Barra, still only 55, will some day be remembered as one of the greatest CEOs in General Motors' storied history.

Follow me on Twitter @JoannMuller

I'm the Detroit bureau chief for Forbes, which means I spend most of my time covering the automotive industry. But I also keep an eye on the rest of America's heartland—where stuff is manufactured and grown. I've been on the auto beat for more than 20 years at Forbes, Busine...